New Rules for Overtime Pay to Boost Income for Employees in Low-Paying Jobs
Amidst rising costs and pay hikes that aren't able to keep up, fair wages have become a key talking point for the government as well as presidential candidates. Naturally, overtime pay has also taken center stage as workers want to get paid fairly for working extra hours. This has prompted the Biden-Harris administration to announce an increase in the minimum salary threshold so that the employees can be eligible for time-and-a-half pay after 40 hours of work in a week.
Limits on the new rule
As per the rule, workers earning less than $43,888 a year (or $844 a week) will be eligible for overtime payments. Later, the government is aiming to increase the salary limit by $58,656 a year which would be $1,128 a week. Currently, people have to qualify for the limit of $35,568 per year to be eligible for overtime payments. The new salary rule also means that every three years, starting in 2027, the salary limit will go up to keep up with how much people earn. The change will further affect about 4.3 million workers, of which 56% are women and 24% are workers who are people of color. Experts say that these changes are most likely to affect the people working in sectors such as health care, finance, business, and social services.
How the rule will benefit the affected ones
As per the new regulations regarding overtime pay protections in the Fair Labor Standards Act it is mentioned that almost all hourly workers qualify for 1.5 times their pay after working for 40 hours in a week. According to EPI, right now, about 15% of salaried workers can get paid extra for working overtime. But with the new rules, that number is expected to double. However, it's still much lower than in the 1970s when about 60% of salaried workers could get overtime pay.
Experts at FTC say that this new rule is long overdue as it will become a game-changer for lower-income families. Additionally, the Federal Trade Commission issued a final rule on Tuesday banning noncompete, which proponents say will promote job-switching, higher wages, new businesses, and innovation. These agreements are involved in stopping the workers from joining or starting a similar job after leaving a company. And as per the numbers revealed by the FTC, around 30 million, or 18%, of U.S. workers, are currently subject to the guidelines under the noncompete agreements. The Federal Agency has the notion that with the introduction of this new rule, the average worker earns an additional $524 each year. It could also help lower health-care costs by up to $194 billion over the next ten years and make about 8,500 new businesses start up each year, which is a 2.7% increase. The rule will come into effect 120 days after being published in the Federal Register.